Wednesday, January 16, 2013
Since the global economic crisis began in 2008, Platinum seems to have been relegated to a role as an industrial metal, as opposed to a safe haven investment such as Gold seems to have become. Rightly or wrongly, Gold's significant liquidity and ample supply have allowed the yellow metal to trade at a premium to the rarer and, in my opinion, more useful Platinum. Given this shift in outlook, traders should be aware that though Platinum has begin to narrow its price gap to Gold, due to a tightening supply outlook, any signs of global economic stress could see many traders moving assets back into Gold over Platinum, despite the current fundamental outlook.
Since the start of 2013, Gold futures prices have lagged versus the sharp gains seen in Platinum, as bullish supply fundamentals for the "white metal" and a move by many investors out of so called "safe haven" investments and back into equities have affected Gold's performance so far this year. However, it is still too early to dismiss a potential rally in Gold prices in the coming months. Signs that the Chinese economy may be on an upswing and "cheaper" Gold prices, as compared to much of 2012, may see increased physical buying out of Asia, and especially India, ahead of the festival season. In addition, signs that Federal Reserve Chairman Ben Bernanke is not satisfied with the current rate of economic improvement in the U.S. may signal that accommodative monetary policies will be in place longer than many analysts expect is also viewed as supportive for Gold and commodities in general. Large and small speculators have been shedding some of their long Gold positions of late, with the most recent Commitment of Traders report showing a combined decline of 14,624 contracts for the week ending January 8th. This may leave room for additional long positions to be established should Gold prices jump on the back of the resurgent Platinum bull market.
Technical Notes
Looking at the daily chart for April Gold, we notice the 20 and 200-day moving averages have converged, which is confirming what appears to be a consolidation pattern forming on the daily chart. The upside price move on Tuesday seems to have given Gold bulls a slight upperhand. The 14-day RSI is rising and is now in neutral territory, with a current reading of 51.20. The high made on January 2nd of 1697.20 looks to be the next resistance level for April Gold, with support found at the January 4th low of 1627.90.
Mike Zarembski, Senior Commodity Analyst